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  • 2018 PREQIN GLOBAL PRIVATE DEBT REPORT

    SAMPLE PAGES

    ISBN: 978-1-912116-09-6 $175 / £125 / €150 www.preqin.com

  • © Preqin Ltd. 2018 / www.preqin.com2

    DATA PACK FOR 2018 PREQIN GLOBAL PRIVATE DEBT REPORT

    The data behind all of the charts and infographics featured in this report is available to purchase in Excel format. Ready-made charts and graphs are also available, and can be used for marketing materials, presentations or company reports.

    www.preqin.com/gpdr

    CEO’s Foreword - Mark O’Hare 4

    1: 2018 PREQIN GLOBAL PRIVATE DEBT REPORT

    Keynote Address - Ted Koenig, Monroe Capital 6

    Keynote Address: Private Debt Is Becoming a Staple of Portfolio Allocation - Thierry Vallière & Thierry de Vergnes, Amundi

    9

    2: OVERVIEW OF THE PRIVATE DEBT INDUSTRY

    Private Debt in Context 12

    Private Debt: 2017 in Numbers 14

    Private Debt Breaks $100bn in 2017 - Ryan Flanders, Preqin 15

    The Birth of Private Credit into Mainstream Financing - Stuart Fiertz, Alternative Credit Council

    16

    3: ASSETS UNDER MANAGEMENT AND DRY POWDER

    Assets under Management and Dry Powder 18

    4: FUNDRAISING

    The European Opportunity - Cécile Mayer Lévi, Tikehau Capital

    22

    2017 Fundraising Market 23

    Funds in Market 25

    In Focus: Regional Fundraising 27

    North American Fundraising 28

    European Fundraising 29

    Asia & Rest of World Fundraising 30

    In Focus: Fundraising by Primary Strategy 31

    Direct Lending Fundraising 32

    Distressed Debt Fundraising 33

    Mezzanine Fundraising 34

    5: FUND MANAGERS

    Strong Demand for Alternative Lenders of Scale - Jeff Levin, The Carlyle Group

    36

    Fund Manager Outlook for 2018 39

    Fund Manager Views on Investor Appetite 41

    First-Time Fund Managers 42

    Largest Fund Managers 44

    6: PERFORMANCE

    Performance Overview 48

    7: INVESTORS

    Seeking Relative Value in Global Private Debt - Terry Harris, Barings

    52

    Evolution of the Investor Universe 54

    Investor Appetite for Private Debt in 2018 56

    Sample Investors to Watch in 2018 58

    How Investors Source and Select Funds 60

    Largest Investors by Region 61

    Largest Investors by Type 62

    8: INVESTMENT CONSULTANTS

    Investment Consultant Outlook for 2018 64

    9: FUND TERMS AND CONDITIONS

    Fund Terms and Conditions 68

    Investor Attitudes towards Fund Terms and Conditions 70

    10: DEALS

    Deals Overview 72

    11: SERVICE PROVIDERS

    Placement Agents 76

    Fund Administrators 78

    Fund Auditors 79

    Law Firms 80

    CONTENTS

    2018 PREQIN GLOBAL PRIVATE DEBT REPORT - SAMPLE PAGES

  • © Preqin Ltd. 2018 / www.preqin.com12

    2. OVERVIEW OF THE PRIVATE DEBT INDUSTRY2018 PREQIN GLOBAL PRIVATE DEBT REPORT - SAMPLE PAGES

    PRIVATE DEBT IN CONTEXT

    Fig. 2.3: Top Three Challenges Facing Private Capital Fund Managers in 2018 by Asset Class

    Private Equity Private Debt Real Estate Infrastructure Natural Resources

    Valuations Valuations Valuations Valuations Commodity Prices

    Performance Deal Flow Deal Flow Regulation Ongoing Volatility/

    Uncertainty in Global Markets

    Exit Environment Performance Interest Rates Deal Flow Public Perception of Industry

    Source: Preqin Fund Manager Surveys, November 2017

    1,477 1,430 1,586 1,733 1,807 1,947

    2,189 2,242 2,388 2,582 2,829

    205 246 281

    332 371 400

    474 472 551

    604 638

    408 398 393

    447 559 593

    706 749 803

    780 811

    100 118 125

    162 210

    221

    276 296 324

    386 418

    58 77 85

    102 114

    141

    173 186 194

    230 229

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    5,000

    Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Jun-17

    Private Equity Private Debt Real Estate Infrastructure Natural Resources Source: Preqin Online Products

    As se

    ts u

    nd er

    M an

    ag em

    en t (

    $b n)

    Fig. 2.1: Private Capital Assets under Management by Asset Class, 2007 - 2017

    Preqin refers to ‘private capital’ as the broader spectrum of private closed-end funds, including private equity, private debt, private real estate, infrastructure and natural resources. Here, we put the private debt asset class into context within the wider private capital industry.

    Fig. 2.2: Annual Aggregate Private Capital Raised by Asset Class, 2007 - 2017

    414 407

    213 178 226 234 316 359 344

    414 453

    73 100

    24 41 44 63

    72 74 100

    97 107

    139 148

    53 55 78 85

    108 114 136

    126 111

    44 41

    11 33 26

    29

    49 43

    47 66

    6513 18

    24 12 11

    31

    33 31

    44 25

    20

    0

    100

    200

    300

    400

    500

    600

    700

    800

    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    Private Equity Private Debt Real Estate Infrastructure Natural Resources

    Source: Preqin Online Products

    Ag gr

    eg at

    e Ca

    pi ta

    l R ai

    se d

    ($ bn

    )

    Year of Final Close

  • © Preqin Ltd. 2018 / www.preqin.com14

    2018 PREQIN GLOBAL PRIVATE DEBT REPORT - SAMPLE PAGES

    14

    PRIVATE DEBT: 2017 IN NUMBERS

    SIZE OF THE INDUSTRY FUNDRAISING SUCCESS

    $107bn Aggregate capital raised by the 136 private debt funds

    closed in 2017.

    107% Average proportion of target size achieved by private debt

    funds closed in 2017.

    CAPITAL CONCENTRATION KEY ISSUES

    $869mn Average size of private debt

    funds closed in 2017.

    32% of aggregate capital was secured by the 10 largest

    funds closed in 2017.

    40% of investors consider

    valuations as a key issue facing private debt in 2018.

    45% of fund managers believe it is now more difficult to find

    attractive opportunities than 12 months ago.

    PERFORMANCE INVESTOR SENTIMENT

    80% of investors believe that their

    private debt portfolios will perform about the same or

    better in the next 12 months than in the last 12 months.

    $71bn Total capital distributions by

    private debt funds in H1 2017.

    51% of investors have a positive perception of private debt.

    42% plan to commit more capital to private debt funds in the

    next 12 months than in the past 12 months.

    $638bn Private debt assets under management

    as at June 2017.

    $236bn Dry powder held by private debt funds

    as at December 2017.

    2. OVERVIEW OF THE PRIVATE DEBT INDUSTRY2018 PREQIN GLOBAL PRIVATE DEBT REPORT - SAMPLE PAGES

  • 4. FUNDRAISING

    15

    Private debt fundraising surpassed $100bn in aggregate capital raised by funds closed in 2017, doing so for the first time after close calls in 2008, 2015 and 2016. Direct lending funds alone closed the year with more than $50bn in committed capital across 61 funds, double the total for 2016 ($24bn). The average fund size also more than doubled for direct lending funds closed in 2017 to $1bn compared to $478mn in 2016.

    North America-focused funds once again enjoyed the highest fundraising totals, reaching $67bn. The region accounted for 63% of aggregate capital raised by funds closed during the year, and continues to host the most active private debt market. After being surpassed by Europe-focused direct lending funds in 2016, North America-focused direct lending regained the top spot, raising $32bn versus $22bn for direct lending funds focused on Europe. The overall European private debt market continues to thrive, with 40 funds having seen closures securing an aggregate $33bn in 2017, building on a strong 2016 when $26bn was raised.

    Driven by strong and consistent fundraising cycles, private debt industry AUM reached a new high of $638bn as at June 2017. Dry powder as at December 2017 is also at an all-time high, with $236bn of capital available for

    investment. Once again we see the bulk of this capital concentrated in North America and Europe, representing 94% of dry powder held by managers, but with $16bn in Asia- and Rest of World-focused funds, it is clear that key markets outside the two main hubs of private debt are expanding. As at January 2018, 11% of private debt investors tracked by Preqin are based in Asia, up from only 6% at the start of 2016, signalling a substantial increase in activity from investors based in the region, coinciding with the more robust fundraising figures coming out in 2017.

    Europe-based investors account for 24% of those active in private debt, while North America is home to 57% of institutional investors. The proliferation of interest in private debt fund exposure has clearly extended beyond just Europe and North America, with increasing numbers of investors based in countries such as India, China, Japan, Brazil and many more, which account for 19% of the 3,154 private debt investors globally.

    As at January 2018, there are 335 private debt funds in market seeking $149bn across all private credit strategies, including one $10bn vehicle from Goldman Sachs. At the other end of the sp